The US dollar (USD) consolidates Tuesday's gains. The economists of BBH analyze how the US dollar (USD) could react to the Fed's decision.
The risk is that the Fed's new fund rate forecasts imply less easing in 2024 and 2025
The two key points to analyze are: (i) Press publication. The risk is that the statement is moderated to signal greater confidence that inflation is moving sustainably towards 2%, in line with recent comments from Chairman Powell. (ii) Summary of economic projections. Persistent underlying inflation in the US and encouraging economic growth prospects suggest the risk that the Fed's new projections on the funds rate (the so-called Dot Plot) imply less easing in 2024 and 2025.
If the Fed becomes less dovish, the USD rally will accelerate as Fed funds rate expectations adjust upwards. Conversely, if the Fed dismisses the latest high US inflation readings as noise and moves forward with a dovish outlook, the USD will come under renewed downward pressure..
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
